Commercial Litigation and Dispute Resolution Blog

On July 18, 2012 the B.C. Medical Services Commission (the “Commission”) released the results of an audit of two private health care facilities in Vancouver, the Cambie Surgery Centre and the Specialist Referral Clinic, which revealed that the two facilities have been billing patients directly for surgical and other medical services that are otherwise covered under B.C.’s public Medical Services Plan (“MSP”). The results of the audit are hardly a surprise. Both facilities are operated by Dr. Brian Day, a well-known advocate for increasing the availability of private health services as part of the overall health care system. Dr. Day has operated his facilities openly for many years and has made no secret of the fact that those facilities bill patients directly. Up until recently however, the facilities (along with a number of other private facilities in B.C. that operate in a similar manner) have been allowed to carry out their work with little or no interference from the Commission, which is the statutory body charged with overseeing the operation of the MSP pursuant to the governing statute, the Medicare Protection Act, RSBC 1996, c. 286 (the “Act”).

Under that Act, subject to certain limited exceptions, a physician or health care facility is not permitted to charge a patient directly for any medical service that qualifies as an insured benefit under MSP. This prohibition is in large measure intended to ensure that the B.C. medical system complies with the requirements of the federal Canada Health Act, which similarly bans the direct billing of patients. A province that fails to comply with the federal statute runs the risk of losing federal transfer payments that are used to help fund the provincial systems.

As noted, the activities of the private facilities have largely gone un-checked for a number of years. This is arguably due to the fact that the provincial government and the Ministry of Health, although they would never say so publicly, recognize the value that the private facilities bring by relieving pressure that would otherwise strain the public system. However, the government has recently come under pressure to pursue the facilities and to put an end to the practice of direct billing.

In particular, in 2009, a number of individuals backed by the B.C. Nurses Union commenced a legal proceeding against the Commission alleging that it and the Ministry of Health were failing to enforce the provisions of the Act by permitting the private facilities to continue to direct bill patients. In response, the Cambie Surgery Centre and a number of other private facilities launched their own action against the Commission and the government alleging that the prohibition against direct billing is unconstitutional in that it unduly restricts a patient’s ability to make fundamental health care choices in a manner that violates the liberty rights protected under s. 7 of the Canadian Charter of Rights and Freedoms.

The constitutional challenge is based in part upon the 2005 decision of the Supreme Court of Canada in Chaoulli v. Quebec (Attorney General) in which the Court struck down provisions of Quebec legislation that prohibited private insurance for medical services that are available under the public system. The rationale of the majority of the Court was that where the public system fails to deliver essential medical services in a timely manner thus jeopardizing the health and well-being of patients, it is unconstitutional to deny those patients the option of seeking treatment privately.

To date, the competing law suits have proceeded at a glacial pace, perhaps because neither side is anxious to get a result. From the government’s perspective, it may not want the court to tell it that it is obliged to put an end to the practice of direct billing as that may put the private facilities out of business thereby increasing pressures within the public system. Alternatively, even if the court were to find in favour of the facilities, the government would be under pressure for not doing enough to save and protect the public system. Similarly, the private facilities may not be in a hurry to be told by the court that their practices are illegal.

The landscape has now changed however with the release of the Commission audit. Armed with clear information that the facilities are in fact direct-billing patients in violation of the Act, the Commission and the government are arguably obliged to act. If the Commission takes steps to enforce the Act, for example by way of court injunction, the facilities will no doubt respond with their constitutional arguments as to why the prohibition against direct billing is invalid.

Debating Canada’s public health care system is a favorite sport in Canada and the role of private health services within that system is an issue that divides politicians, academics, lawyers, doctors and members of the public generally. Depending upon the Commission’s next steps and the response of the private facilities in B.C., it is an issue that may come to a head in a courtroom in the near future.

More information about the Chaoulli decision of the Supreme Court of Canada can be found here.

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